Who Knew That Build-To-Rent Operators Would Be Selling Lots to Homebuilders?

This wasn’t hard to imagine happening if a few very important variables changed. Real estate debt and equity pricing and terms adjusted. The lack of proper underwriting of project fundamentals created a buying spree of sorts for BTR operators trying to deploy capital. Wall Street LBO veterans started to buy raw land when they weren’t experienced in land development. Some hired enough quality talent to get the job done, but many didn't. This has created an opportunity for home builders nationwide to access a new segment of “land developers” from Wall Street who never expected to be doing just that.

2023 has shown that many BTR players must shift their business models and focus on one segment of the land development and home-building ecosystem. We're pleased to hear BTR executives stop saying they are developers or builders and instead say they are "asset allocators." It's unfortunate that many of these inexperienced groups decided to squander their one shot at doing business with the people on the ground who build homes and develop the land.

We're interested to see how this asset class evolves over the next 16 months.

-BFR Partners